Correlation Between Teck Resources and Gmo Opportunistic

Can any of the company-specific risk be diversified away by investing in both Teck Resources and Gmo Opportunistic at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Teck Resources and Gmo Opportunistic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Teck Resources Ltd and Gmo Opportunistic Income, you can compare the effects of market volatilities on Teck Resources and Gmo Opportunistic and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Teck Resources with a short position of Gmo Opportunistic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teck Resources and Gmo Opportunistic.

Diversification Opportunities for Teck Resources and Gmo Opportunistic

0.64

Correlation Coefficient

Teck Resources  Gmo Opportunistic

Poor diversification

The 3 months correlation between Teck and Gmo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Teck Resources Ltd and Gmo Opportunistic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Opportunistic and Teck Resources is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Teck Resources Ltd are associated (or correlated) with Gmo Opportunistic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Opportunistic has no effect on the direction of Teck Resources i.e., Teck Resources and Gmo Opportunistic go up and down completely randomly.

Pair Corralation between Teck Resources and Gmo Opportunistic

Given the investment horizon of 90 days Teck Resources Ltd is expected to generate 18.04 times more return on investment than Gmo Opportunistic. However, Teck Resources is 18.04 times more volatile than Gmo Opportunistic Income. It trades about 0.03 of its potential returns per unit of risk. Gmo Opportunistic Income is currently generating about 0.16 per unit of risk. If you would invest  4,094  in Teck Resources Ltd on January 25, 2024 and sell it today you would earn a total of  459.00  from holding Teck Resources Ltd or generate 11.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Teck Resources Ltd  vs.  Gmo Opportunistic Income

Teck Resources

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teck Resources Ltd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Teck Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

Gmo Opportunistic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Opportunistic Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gmo Opportunistic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Teck Resources and Gmo Opportunistic

The main advantage of trading using opposite Teck Resources and Gmo Opportunistic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teck Resources position performs unexpectedly, Gmo Opportunistic can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gmo Opportunistic will offset losses from the drop in Gmo Opportunistic's long position.

The idea behind Teck Resources Ltd and Gmo Opportunistic Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.